DBRS Morningstar Finalizes Provisional Ratings on SMB Private Education Loan Trust 2023-B

DBRS, Inc. (DBRS Morningstar) finalized its provisional ratings on the following classes of notes (the Notes) issued by SMB Private Education Loan Trust 2023-B (SMB 2023-B):

-- $869,100,000 Fixed Rate Class A-1A Notes rated AAA (sf)
-- $869,100,000 Floating Rate Class A-1B Notes rated AAA (sf)
-- $269,700,000 Fixed Rate Class B Notes rated AA (sf)
-- $42,000,000 Fixed Rate Class C Notes rated A (sf)
-- $135,100,000 Fixed Rate Class D Notes rated BBB (sf)

The ratings are based on DBRS Morningstar’s review of the following analytical considerations:

-- The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary “Baseline Macroeconomic Scenarios for Rated Sovereigns: April 2023 Update,” published on April 28, 2023. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.
-- The transaction’s form and sufficiency of available credit enhancement.
-- Overcollateralization, note subordination, reserve account amounts, and excess spread create credit enhancement levels and liquidity that are commensurate with the proposed ratings.
-- Transaction cash flows are sufficient to repay investors under all AAA (sf), AA (sf), A (sf), and BBB (sf) stress scenarios in accordance with the terms of the SMB 2023-B transaction documents.
-- The quality and credit characteristics of the student loans and underlying borrowers.
-- Sallie Mae Bank’s (SMB) capabilities with regard to originations and underwriting.
-- DBRS Morningstar has performed an operational review of SMB’s origination platform and has determined the bank to be an acceptable student loan originator.
-- The ability of the Servicer to perform collections on the collateral pool and other required activities.
-- DBRS Morningstar has performed an operational review of SMB as the servicer and considers the entity an acceptable servicer of private student loans.
-- The legal structure and presence of legal opinions that address the true sale of the student loans, the nonconsolidation of the trust, that the trust has a valid first-priority security interest in the assets, and consistency with DBRS Morningstar's “Legal Criteria for U.S. Structured Finance.”

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929 (May 17, 2022).

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology applicable to the ratings is Rating U.S. Private Student Loan Securitizations (October 28, 2022; https://www.dbrsmorningstar.com/research/404500).

Other methodologies referenced in this transaction are listed at the end of this press release.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

The rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the rating process for this rating action.

DBRS Morningstar had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrsmorningstar.com.

DBRS, Inc.
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New York, NY 10005 USA
Tel. +1 212 806-3277

The rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

Rating U.S. Structured Finance Transactions (February 6, 2023; https://www.dbrsmorningstar.com/research/409449).

Operational Risk Assessment for U.S. ABS Servicers (April 5, 2023; https://www.dbrsmorningstar.com/research/412303).

Operational Risk Assessment for U.S. ABS Originators (April 5, 2023; https://www.dbrsmorningstar.com/research/412302).

Legal Criteria for U.S. Structured Finance (December 7, 2022; https://www.dbrsmorningstar.com/research/407008).

Interest Rate Stresses for U.S. Structured Finance Transactions (August 30, 2022; https://www.dbrsmorningstar.com/research/402153).

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.